Two #banks have unveiled a corporate cross-border payment solution for real-time #payments, using #Ripple’s #blockchain solution for the network. The solution, which is now commercially available between #Standard #Chartered #bank in Singapore, and #Axis Bank in India, will give corporates “greater control over cash flow,” according to the banks. While Axis Bank corporate customers can […]
Bank Innovation
The Innovator’s Dilemma hangs over financial firms #digital transformation strategies — they making money, so why change? #Forrester says they have to if they want to remain profitable.
Financial Technology
EXCLUSIVE—#Banks need to start integrating with more #fintech services and building out more products through APIs, #FI.SPAN CEO Lisa Shields told Bank Innovation, #before regulations on open banking start to cramp what FIs can build. “What we are betting our business on, is that there is a massive opportunity for banks to innovate,” Shields said. […]
Bank Innovation
In “Paradise Lost”, 17th-century English poet John Milton describes two types of warriors: One group are “employed in sporting games and exercises” and “sing in the valleys”, while the other group “rend up both rocks and hills”, “make wild uproar” and “ride the air in whirlwind”.
Milton’s bifurcation also applies to the modern-day #payments industry. With fast-paced disruptive change sweeping the industry, are traditional payment players going through the motions trying to protect their traditional sources of profit or are they willing to be combative and create “wild uproar” by driving radical change?
Consider Accenture’s prediction that in the UK alone there will be between six billion and nine billion contactless card transactions in 2017. Alternative payment mechanisms such as PayPal and iDEAL will continue to grow at 20 to 30 percent a year for e-commerce transactions, driven by convenience and sky-rocketing fraud rates in card-not-present transactions. We estimate that up to 25 percent of banks’ traditional cross-border payments revenue streams are at risk from these innovations. These are just a few of the seemingly endless examples of disruptive change in the payments industry. Traditional payments players are at a crossroad: figure out how to ride this whirlwind to success, or be content to just keep playing the traditional games.
To help #banks make sense of this fast-changing landscape, Accenture has identified ten payments #mega #trends from our 2017 North America Consumer Payments Pulse Survey.
One key trend is banks’ new-found enthusiasm for collaborating with digital consumer-to-business and #fintech partners to both exploit the power of an exponentially growing network and deliver benefits to customers. Tapping into these networks allows payments players to multiply capabilities and extend their reach without building and investing from scratch. One example is Zelle®. This API-enabled network of more than 50 partners, including Ally, Wells Fargo, Bank of America and JPMorgan Chase, offers real-time, person-to-person payments and disbursements through one recognisable brand. According to Zelle, some 85 million consumers can now experience its services through the mobile banking apps of the Zelle Network® participant banks. The app quickly ramped up to $ 33.6 billion in network volumes and 100 million transactions in the first half of 2017. This scale gives participating banks the edge they need to compete effectively with challengers like Venmo from PayPal. Creating and capitalising on network effects require banks to participate in digital ecosystems beyond their own walls and be willing to subsume to some degree their own operating models, cultures and strategies. Just as the payments industry of 50 years ago was energised by the emergence of the credit card networks, we are now seeing a new set of digital networks emerge that also have the power to reshape payments.
Another critical trend driving the #future of payments is the democratisation of payments acceptance. Today, everyone can be a merchant and every device can accept payments, whether you are talking traditional point-of-sale, online or mobile. Enabled by new entrants like Stripe and Square, all it takes is connectivity, a portable card reader or a website to create the next-generation POS. This “payments everywhere” wave that enabled small merchants and peer-to-peer commerce has also created new growth opportunities for payments players; they can address such increasingly attractive markets as large merchant payment margins get more compressed. This democratisation of payments acceptance has also created new opportunities for analytics-based lending and data monetisation strategies, which also offer new and appealing revenue streams for payments players.
These are just two of the ten payments mega trends identified in our recent report, Driving the Future of Payments: 10 Mega Trends, and I encourage you to explore the other eight. Regardless of what type of payments warrior you are, we hope this report can help you ride the whirlwind to the future, as simply singing in the valley is unlikely to be a successful long-term strategy.
The post Ten mega trends that will drive the future of payments appeared first on Accenture Banking Blog.
#Banks have witnessed a spate of cyber breaches recently with the financial sector experiencing 300 percent more cyberattacks than any other industry. More than 75 cyberattacks against financial services companies were reported in first nine months of 2016.
A string of regulations requiring banks to adopt a more open architecture will further expose them to heightened cybersecurity risks, and the rapid pace of digitization in banking will only add to it.
However, the banking industry is yet to see an increased responsibility in the role of a Chief Information Security officer (#CISO). A study by Gartner showed that only 20 percent of CISOs report to the CEO with ~60 percent of them reporting to the Chief Information Officer (CIO) or an IT executive. With the growing #importance of security in an organisation, this current reporting structure might need to #change more to favour CISOs reporting directly to the CEO.
There have been instances of uneven allocation of the IT budget for spend on cybersecurity, resulting in CISOs getting a smaller piece of the pie. Studies have shown that information security takes only a tiny three to five percent of the overall IT budget.
UK banks have seen some traction here: Barclays has merged its two security functions, with previous Chief Security Officer (CSO) and CISO roles coming together under a combined CSO. Lloyds has set up a cybersecurity advisory panel to bring an industry perspective on key cyber-related activities and threats. The panel is part of a subcommittee to the Board Risk Committee (BRC) and the Chief Risk Officer regularly informs the BRC of the aggregate risk profile of the bank.
Having the CISO report outside of the IT leadership could have several advantages:
IDC believes that by 2018, increases in cybersecurity threats could result in 75 percent of CSOs and CISOs reporting to the CEO. Some regulators are even making it mandatory: In Israel, there are laws dictating that CISOs report directly to the CEO. UK banks should take a cue and become the financial services gold standard in cybersecurity governance.
The primary goal of the CISO is not to protect #technology but to protect the business. Though the position has risen in the organisational structure to the inner circles of the C-suite, a CISO’s ability to dictate a budget and make decisions independently may still depend on where the position falls in the organisational structure. Further, the role of cybersecurity experts has become increasingly important on the board, which has translated to higher salaries and attrition as well. Empowering CISOs might help mitigate this, through increasing representation on the board, direct reporting to the CEO, independent budget allocation and a role in strategy formulation.
The post CISO importance is prompting internal role change appeared first on Accenture Banking Blog.
Digital transformation and #open source amount to more than #technology — they require and inspire cultural change sin #banks.
Financial Technology
EXCLUSIVE–Just having a #mobile app is no longer a differentiating factor for consumers when it comes to picking a bank, but that doesn’t mean consumers aren’t searching for a unique mobile #banking experience. However, for those regional #banks or credit unions without the assets of a Bank of America or JPMorgan Chase, providing a tailored […]
Bank Innovation
#China will move to an open market for financial services, allowing international financial firms to have more access into the country’s economy, Zhu Guangyao, China’s vice finance minister said today. The country’s new regulatory stance will #remove #foreign #ownership #limits on #banks. China will also allow international firms to take majority stakes in other companies, […]
Bank Innovation
When it comes to #Open #Banking, regulatory, technological and competitive pressures are forcing #banks to confront the choice posed by French critic, journalist and novelist Alphonse Karr: “We can complain because #rose bushes have thorns, or rejoice because thorns have roses.”
Recent Accenture research indicates that banks in Europe (where Open Banking is being mandated) and in North America and Asia Pacific (where, at the moment, it is optional) appear to be choosing to admire the flowers.
Our recent poll of 100 payments executives suggests that banks are seeing the opportunities inherent in allowing customers to share access to their financial data (such as bank account balances and transaction history) with non-bank third parties, so that those third parties can then create apps and services in which banking is embedded. Ninety percent of respondents expect Open Banking to boost revenues by up to 10 percent. Nearly two-thirds of North America banks say that implementing Open Banking is critical to remaining relevant and competing with new entrants, such as fintechs and tech giants like Google, Apple, Facebook and Amazon. A minority of banks (37 percent in North America, 29 percent in Europe and 23 percent in Asia Pacific) already distribute banking products through third parties to consumers with whom they do not have a primary relationship, although these are often through traditional distribution partnerships rather than digital embedding.
Yet like a rose bush, Open Banking also comes with some thorny threats. Half of the banks are concerned that Open Banking will make them more vulnerable to security breaches and fraud, because banks must expose their proprietary software and application programming interfaces (APIs) to allow outsiders to integrate their services. This concern is particularly prevalent in Europe, where nearly two-thirds of banks think Open Banking will increase risk; a point maybe not unconnected with the new European GDPR data protection regulations and the stiff fines that will be levied for breaches. The other risk posed by Open Banking is a business one, and is the concern that banks will become commoditised product providers with their transactional services and their brands buried deep in transaction flows controlled by non-bank competitors.
Banks can turn Open Banking to their advantage, and are likely to see revenue decline if they adopt just a basic compliance mentality. But doing so depends on how they look at it: as a #thorn to their existing value chain that they must minimise or avoid, or as an attractive new path to new products and services, incremental revenue streams, and a better experience for their customers. Done correctly, banks will be able to admire a glorious bouquet of roses at the centre of their business, rather than continually hunting for Band-Aids to stem the bleeding from pricked fingers.
I invite you to read more about our survey findings.
The post Banks decide whether Open Banking will be the rose or the thorn appeared first on Accenture Banking Blog.
#Culture transformation programmes are ten-a-penny in businesses across all industries. That’s no surprise. The pace of #change—technological, economic and competitive—means all large organisations must now think very differently about how they operate and the way their people work.
For #banks, some extra pressures are pushing them in this direction. Tougher post-crisis regulation has introduced multiple layers of complexity and bureaucracy into their businesses. These can get in the way of agility and responsiveness. Personal accountability for decision-making can stifle spontaneity. And traditional hierarchical structures encourage rigidity (and discourage innovation).
All this at a time when disruptive competition from non-traditional sources poses a hugely potent threat. Bank leaders know they must adapt or lose relevance. They have to encourage their people to collaborate better, have greater trust in leadership, make decisions rapidly and, crucially, be more agile and innovative at every level of the enterprise.
Culture change is an agenda we hear all the time in our work with financial services businesses. And in this blog—the first in a short series—we’re introducing what we’ve learned from experience. The bottom line? Culture change is the outcome. Transforming how business is done is essential to make it happen.
Whatever the organisation, the primary objective for culture change is the same: getting back to your ‘prime’. Or put it another way: As businesses mature with age, looking ahead entails looking back. Improved agility and responsiveness hinge on rejuvenation and re-energisation.
We identify five core ‘beliefs’ that are key to making this happen. In this blog, we’ll introduce them. Next time, we’ll examine them—and what they look like in practice—in greater detail.
Firstly, culture change must be insight-driven. As a baseline, businesses need a laser-sharp focus on where they are today, how they’re behaving as an organisation, and how well they’re doing against key measures. That means a data-powered approach is essential. It’s not enough to base culture change programmes on a few engagement surveys or sentiment reviews on Glassdoor. Precision is critical. And that includes understanding how employee behaviours are being reinforced in their day-to-day jobs—and how to change them.
Secondly, successful culture change programmes put people (customers and employees) at the centre. Linked to this is the third key belief: They’re also co-created. That means leaders, colleagues and employees at every level need to be involved in shaping and enabling change. It’s the only way to build and sustain trust in the organisation.
The fourth belief: Recognise how tiny changes can make a massive difference to performance. It’s all about understanding the cumulative effect these changes will have. That means experimentation. Hypothesise, prototype, proof of concept, scale. Repeat.
Lastly, embed change everywhere. That means leaders must be demonstrably committed, living out the change and embodying it in everything they do. It’s through their example that others will be encouraged to shift their behaviour.
Next time, we’ll take a closer look at these beliefs. Meanwhile, thanks for reading.
The post Really want to change your bank’s culture? Change with the business. appeared first on Accenture Banking Blog.
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